An in Depth Look at Saudi Arabia s Privatization and PPP Opportunities National Centre for Privatization & PPP Riyadh, Saudi Arabia November 27, 2017
Saudi s Privatization History The Privatization Program at the heart of Vision 2030 What is NCP? The NCP Mandate NCP s Functions and Responsibilities Why Invest in KSA? Why Invest in KSA s Privatization Program? Privatization Supervisory Committees (PCS) How will it work? Table of Content Privatization Priority List What Will be Privatized? Where the Kingdom and UK can work together QUESTIONS?
Saudi s Privatization History NCP was launched in July 2017, but KSA has a long history of privatizations 1970 1980 2000 2001 Kingdom s history Of Privatization 2016 2017 2030 July NCP Launched August Supervisory Committees Launched The Kingdom s aspiration is to privatize 7x compared to its historic activities 3
The Privatization Program at the heart of Vision 2030 Aims to boost private sector contribution to GDP To increase the private sector s contribution from 40 to 65% of GDP... we will remove all obstacles preventing the private sector from playing a larger role in development We will also grow our economy and improve the quality of our services, by privatizing some government services The Privatization Program links directly to 2 vision objectives Unlock state-owned assets for the Private sector Privatize selected government services IN ADDITION to an indirect link to 20 other objectives SOURCE: Vision2030, Vision Realization Program 4
What is NCP? NCP was created to Enable and Govern the Privatization Program established under Vision 2030. We provide world-class expertise in the areas of legal, financial advisory, strategy, risk, marketing and project management. Our values: Why was NCP Established 01 Launch of Vision 2030 02 Privatization Program Developed under Vision 2030 03 Ministerial Committee for the expansion of Privatization Establishment 04 of NCP Champion Agility Value creation. Integrity 5
NCP s Mandate Focus on five key areas to steer the KSA privatization/ppp efforts Develop national regulatory framework for Privatization/PPP Develop rules and procedures to guide PSCs and ETs efforts Provide funding for PSCs and execution teams Policy Making Develop national privatization/ppp KPIs in line with Vision 2030 Provide optional training to entities Set agreements with international PPP/privatization entities Enablement NCP Mandate Privatization/ PPP Framework Development Develop privatization/ppp directives, standards and guidelines Follow up on execution progress and escalate to CEDA where necessary Monitoring and Reporting Advisory & Control Review sector privatization/ppp strategies and models and ensure their alignment with NCP directives, standards & guidelines Review sector regulatory changes and ensure their enablement of the sector's privatization/ppp strategy 6
NCP s Functions and Responsibilities Privatization Governance 01 02 Privatization Enabler Identify Keyperformance Indicators Sector Readiness Standardization of Frameworks & Processes Sector Selection Criteria Policy Setting General Management Micro & Macro Analysis Recommendations per Sector Governance Tracking Progress Training & Development Impact of Privatization Research Studies 7
Why invest in KSA? 01 02 Attractive market A population of 31M with an annual growth rate of 2.5% The largest single market in the GCC & MENA region Mega projects across all industry sectors Tariff free access to the GCC Investor friendly Permits and visas for manpower sourcing Industrial loans and equity partners Export credit, financing, guarantees and insurance Financial support for the training and employment of Saudi nationals 03 04 05 Social Infrastructure Highly educated local workforce Strong higher education system Substantial industrial land availability, commercial real estate and utilities Positive regulatory environment Up to 100% foreign ownership No restriction on profit repatriation Liquid finance market Ease of doing business Ranked 25th in the GCI in 2015 research latest Reforms to facilitate business within Saudi Arabia - specify 8
Why Invest in KSA s Privatization Program? 01 02 03 04 Highly compliant legal framework Strong government backing as part of the vision 2030 Centralized support structure (NCP/ SAGIA) Opportunity for equipment procurement/import from abroad 05 06 07 08 Presence in the largest market in the GCC & MENA and a platform for regional expansion IRR in the high range of comparable investments Access to KSA public procurement Availability of local coinvestors and possibility of IPOs at a later stage 09 10 11 12 Competitive tax environment No limit on dividends and capital gain repatriation Limited foreign exchange risk SAR pegged to USD Access to local financing 9
Privatization Supervisory Committees (PCS) Established by Council of Ministers Decree 665 Supervisory Committee Members Formation of PSC Supervisory committees formation per sector Additional supervisory committees maybe formed based on the recommendation of NCP Main tasks of PSC Define the main goals & objectives for privatization in each transaction Selection criteria for partners, vendors and external consultants Advise on the most suitable privatization models per transaction Commence and lead the execution of privatization processes Directly liaise with government departments to obtain required information Negotiate with prospective private sector investors and related parties Approve and sign any contract related to the implementation of the privatization program Ṣtrong regulatory environment supported by oversight bodies Control and Investigation Board 10 National Anticorruption Commission Nazaha General Auditing Bureau
How will it work? Governance Structure of Privatization Supervisory Committees (PSC) Council of Economic and Development Affairs National Center for Privatization & PPP PSC Independent Auditor Financial Advisor Transaction 1 Transaction 2 Transaction 3 Transaction 4 Transaction 5 Legal Advisor Technical Advisor Marketing Advisor 11
Approval Approval How will it work? Privatization Process First Second Third Fourth Council of Economic & Development Affairs (CEDA) Approval The Committee submits the objectives to CEDA The Committee submits a detailed study to CEDA Receive Final Offer National Center for Privatization & PPP Example: Healthcare primacy care centers outsourcing of services Preliminary Study Supervisory Committee Bidding Stage Sign 12
Privatization Priority List 100+ initiatives have been identified for Private Sector Participation (PSP) in 12 Sectors Health Sector Environment, Water, and Agriculture Sector Municipalities and Rural Affairs Sector Education Sector Hajj and Umrah Sector Labor and Social Affairs Sector Housing Sector Energy, Industry, and Minerals Sector Transportation Sector Tourism Sector Communication and Information Technology Sector Sport Sector 13
What Will Be Privatized? HEALTH Responsible Entity The Ministry of Health The Saudi Health Council King Faisal Specialist Hospital and Research Center General Organization Example Primary Care SPS Radiology Outsourcing Hospital and Medical Cities Commissioning 14
What Will Be Privatized? COMMUNICATION & IT Responsible Entity Ministry of Telecommunication & IT Saudi Post The E-government Program Yesser Example Courier Express and Parcel (CEP) Postal Services 15
What Will Be Privatized? TRANSPORTATION Responsible Entity The Ministry of Transport General Authority of Civil Aviation The Public Transport Authority Examples Aviation Toll Roads Airports Sea Ports Railways Saudi Ports Authority Saudi Arabian Airlines Organization Saudi Railways Organization 16
What Will Be Privatized? EDUCATION Responsible Entity the Ministry of Education General Organization for Technical and Vocational Training Government Universities Example Establishment of School & Educational Buildings Education Support Services 17
What Will Be Privatized? ENVIRONMENT, WATER & AGRICULTURE Responsible Entity The Ministry of Environment, Water and Agriculture The Saline Water Conversion Corporation General Authority of Meteorology and Environmental Protection National Water Corporation Example Water Production Water Distribution Water Wastewater Management Flour Mills Operations Control of Agricultural Pest Veterinary Vaccines Production 18
What Will Be Privatized? ENERGY, INDUSTRY & MINERAL RESOURCES Responsible Entity The Ministry of Energy Industry and Mineral Resources The Royal Commission for Jubail and Yanbu King Abdulaziz City for Science and Technology King Abdullah City for Atomic and Renewable Energy The Saudi Industrial Property Authority (Modon) The National Industrial Clusters Development Program. Example Renewable Energy: Solar PV & CSP, Wind 19
What Will Be Privatized? HOUSING Responsible Entity The Ministry of Housing Example Housing Development E-platforms supporting housing services 20
What Will Be Privatized? LABOR AND SOCIAL DEVELOPMENT Responsible Entity Ministry of Labor and Social Development Example The Training and Recruitment of Talented People Rehabilitation Centers 21
What Will Be Privatized? HAJJ AND UMRAH Responsible Entity The Ministry of Haj and Umrah Example Pilgrims Food, Pilgrims Housing & Accommodation Pilgrims Logistics Services 22
Where the Kingdom and the UK can Work Together Investing in the KSA Privatization Program by UK Companies & Investors Assisting in framing regulations based on UK s past experience in privatization Promoting awareness about the Kingdom s Privatization Program Assisting in establishing R&D facilities in the Kingdom Transferring previous experiences in PPP to the Kingdom Provide training in areas related directly or indirectly to privatization INVESTMENTS REGULATIONS PUBLIC RELATION R&D CABABILITIES INSITIUTION BUILDING KNOWLODGE TRANSFER 23
We look forward to becoming partners as part of the Saudi privatization programs Contact us: ncp.gov.sa halsaigh@ncp.gov.sa QUESTIONS?
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